Adam Xiao's  Instablog

Adam Xiao
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As an investor, I look for companies with excellent long term economics and capable, honest management that can reinvest earnings at an attractive rate. My view is that it is best for to find companies that can compound earnings internally at a market beating rate rather than relying purely on... More
  • SVU: Fire-Drill For Value Investors, Is There Value Is SuperValu? 0 comments
    Jul 12, 2012 2:40 PM | about stocks: SVU

    SVU Down almost 50% upon news of disappointing earnings and on the cutting of its fat dividend, However...

    "EPS came in at $0.19. The 16 earnings estimates compiled by S&P Capital IQ predicted $0.38 per share. GAAP EPS of $0.19 for Q1 were 46% lower than the prior-year quarter's $0.35 per share."

    Annualized .19 EPS per quarter is .76. The stock is trading around 2.7. this is a P/E of ~3.7.

    Also, analysts predict future EPS to be better:

    "Next quarter's average estimate for revenue is $8.17 billion. On the bottom line, the average EPS estimate is $0.29.

    Next year's average estimate for revenue is $35.19 billion. The average EPS estimate is $1.29."

    The company is, however, highly leveraged. Is there value? Get your reading glasses out and decided. My feeling is that there has been an overreaction to the cutting of the dividend, but I'm still doing more research. So, this is not a recommendation to buy without doing your own research.

    Would not be surprised if tomorrow a big investor announces a stake in Super-Valu...

    Disclosure: I am long SVU.

    Stocks: SVU
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